FLI, once leveraged, will be able to invest €1.8bn in French intermediate housing.

The €200m investment by FRR marks a change in strategy after it pulled back from illiquid assets in 2010, following a reform of the country’s pension system that required it to pay €2.1bn a year to towards the deficit in the social security system.

As part of the new €2bn strategy, FRR will also increase its private equity exposure and invest in infrastructure, according to Olivier Rousseau, a member of the fund’s executive board.

Rousseau said a “large portion” of the infrastructure exposure would come from green projects and that the investment in FLI would grow its exposure to assets that perform well from an environmental standpoint.